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The tenure of Toshiba CEO Nobuaki Kurumatani, seen during a news conference at the company's headquarters in Tokyo, Japan on May 15, 2018, was undone by his flagging popularity even before the buyout offer was announced.Issei Kato/Reuters

Toshiba board members planned to oust CEO Nobuaki Kurumatani before CVC Capital Partners launched a $20-billion buyout bid last week, telling him the day before the offer was announced they would replace him, people familiar with the matter said.

Two members of Toshiba Corp’s nomination committee, including board chairman Osamu Nagayama, met Kurumatani, himself a former CVC executive, and told him they intended to look for a new chief executive, three of the people said.

While the board had not formally started the process of replacing Kurumatani, the plan was already in motion, the three said. Nagayama, who also heads the nomination committee, went to the meeting “to fire” Kurumatani, one of them said.

Kurumatani then informed them of the European private equity firm’s plan to take Toshiba private, the three people said. A day later, the Japanese conglomerate announced it had received the offer, two of them said.

The events of the meeting show how Kurumatani’s tenure was undone by his flagging popularity even before the offer was announced. It marked the culmination of deepening discord between Kurumatani and activist shareholders, who had raised concern over what they said were governance issues.

The plan to remove him appears to have accelerated after the April 6 meeting at Toshiba’s headquarters next to Tokyo Bay. On Wednesday, Toshiba said the onetime Sumitomo Mitsui Financial Group banker was stepping down after some three years at the helm.

Support for him both within the company and among investors had eroded, a person briefed on the matter said. All of the sources declined to be identified because of the sensitivity of the issue.

“A survey of managers at Toshiba showed low support for Kurumatani,” the person who was briefed said. There was “deep distrust” of him among shareholders, the person said.

On Wednesday, Toshiba said Kurumatani was stepping down to “recharge” after achieving his plan to revive the conglomerate that had been weakened by an accounting scandal.

Reuters was not immediately able to reach Kurumatani for comment on this story. Nagayama declined to comment. Toshiba said it could not comment on speculation. A representative for CVC Japan declined to comment.


Joining Toshiba in 2018 from CVC’s Japan unit with a pledge to reshape a sprawling 150-year-old enterprise, Kurumatani was a rare outsider in the storied corporation, where managers typically toil for decades before reaching the executive suite.

The challenge against him escalated last month when activist investors won a vote at an emergency shareholders’ meeting to establish an independent probe into whether management had previously pressured shareholders to support desired board nominations.

An earlier, internal probe by Toshiba had found no fault.

That vote convinced the board that Kurumatani was unlikely to win backing to stay in his role at the next annual shareholders’ meeting, a second person briefed on the matter said. At the last shareholders’ meeting he won only 57% of the vote, a stinging rebuke in a country where management is rarely challenged.

Toshiba executives are lobbying against the CVC offer with government officials, who will have to approve any deal because the company builds nuclear reactor manufacturers and defense equipment, according to the person briefed on the matter.

“It’s a deal nobody wants. Toshiba has various businesses linked to national defense and foreign ownership could result in client exodus,” a person familiar with the board’s thinking said.

CVC plans to stick with its takeover bid, Japanese media reported on Wednesday, which a source had said was a 30% premium over Toshiba’s share price at the time of the offer. Hong Kong-based activist fund Oasis Management has slammed that as too low, while U.S. hedge fund Farallon Capital Management has called on Toshiba to solicit other bids.

For now, company chairman Satoshi Tsunakawa, 65, who joined Toshiba in 1979, will manage the company, including having to deal with CVC and other potential bidders. Those could include U.S. investment firm KKR and Canada’a Brookfield Asset Management Inc, according to a Financial Times report.

“We have a shortage of internal candidates for the top post but it will be difficult bring in an outsider after getting rid of Kurumatani,” a source familiar with internal discussions at Toshiba said.

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